Blog

MasterCard International has launched its second “OneSMART Club” in
Northern Europe to bring together MasterCard customers and industry
suppliers in the Baltic States of Estonia, Latvia and Lithuania to foster
and support the deployment of added value chip-based business solutions.
The NE “OneSMART Club” will initially focus on five propositions:
“OneSMART MasterCard Authentication”, “MasterCard Web”, “MasterCard
Pre-Authorised”, “OneSMART MasterCard Retail” and “OneSMART MasterCard
PayPass”. MasterCard provides a range of resources to support Club
members inclduing technical support services and expertise to help
infrastructure set-up, preferred pricing arrangements with vendors,
including privileged support services, support to manage and administrate
the Club and facilitate information sharing, comprehensive marketing
support material for banks and assistance in developing
cardholder communications, and project management support and technical
assistance for pilot launches by individual members.

The latest Kaulkin Ginsberg bulletin on M&A activity in the “Accounts Receivable Management” industry shows that third quarter transactions hit $1.14 billion in total deal value, the largest amount of deal value ever recorded in a quarter. High transaction values and competitive deal structures can be attributed to an economic “sweet spot” in the ARM industry. Declining unemployment, rising inflation, and increasing interest rates all create favorable conditions for the ARM industry. With low capital gains taxes, access to relatively cheap debt, and an excess of cash reserves in corporate balance sheets and investment funds, optimal conditions exist for buyers to continue their robust deal activity in this and other industries. Kaulkin Ginsberg provide solutions to accounts receivable management and other business services industries.

Counterfeit and lost/stolen fraud on U.K. payment cards dropped by nearly a third in the first half of this year due to the new “Chip and PIN” system. Card fraud involving counterfeit and lost/stolen cards was $158 million this year, compared to $222 million for the first six months of 2004. Last week, the “Chip and PIN Program” announced that effective February 14th “Chip and PIN” cardholders must use their PIN to be sure of being able to pay at the point-of-sale. APACS says the vast majority of people are already using PIN at the POS. For debit cards, 97% of transactions, and for credit cards, 89% of transactions, are already successfully verified by PIN. To encourage the PIN stragglers, the “Chip and PIN Program” launched the “I LOVE PIN” campaign. It will run for four months and will include a PR campaign, online information, a customer leaflet and POS material for shop staff to use.

Citigroup reported that third quarter profits for its credit card business in North America slid 6% year-over-year, but were up 16% sequentially. The nation’s second largest bank credit card issuer blames net interest margin compression, higher payment rates, an increase in bankruptcy filings and Hurricane Katrina for the lackluster results. Credit card outstandings for North America of $139.8 billion were flat from the prior quarter and down 1% from one-year ago. The figure includes $25.7 billion in private label card outstandings. Bank credit card outstandings have declined for four consecutive quarters, according to CardData ([www.carddata.com][1]). Purchase and cash advance volume increased 10% year-on-year to $73.7 billion. Citi’s account base at the end of the third quarter declined by 3.2 million accounts from the prior quarter and was down 4% from one-year ago. At the end of 3Q/05, Citi had 123.9 million accounts in North America. Citi’s charge-offs decreased from 5.82% in the second quarter, to 5.58% for 3Q/05. Charge-offs for bank credit cards slipped to 5.49%, compared to 5.59% in the second quarter but above 5.34% one-year ago. Charge-offs for private label credit cards dropped from 6.28% in the second quarter to 6.01% for 3Q/05. Charge-offs for private label cards remain well below year-ago levels by 107 basis points. Delinquency (90+ days) increased slightly from 1.70% for 2Q/05 to 1.73% for the third quarter 2005. Delinquency for bank credit cards edged up by 2 basis points from the year-ago level. For complete details on Citigroup’s 3Q/05 performance, visit CardData ([www.carddata.com][2]).

UniCredit Banca of Milan has selected NCR Corporation to provide
151 new NCR “Personas M Series 86” automated teller machines with
NCR’s “No Envelope” deposit functionality. The image-based “No Envelope”
Deposit technology allows deposits to be accepted at the ATM without the
need of an envelope. The image of the deposited check is displayed on the
ATM screen and printed on the customer’s receipt, together with the totals
and breakdown by denomination of any cash deposited, providing UniCredit’s
customers with immediate proof of their deposit.

American Express has teamed with the San Diego Union-Tribune, the Gaslamp Quarter Association and local merchants to launch the “American Express San DieGO Downtown Marketing Program” website. The new marketing program is free of any administrative or promotional charge to the participating merchants if they agree to offer special incentives to American Express Cardmembers and honor those specials for consumers who have downloaded the appropriate offers and use their American Express Cards for redemption. Consumers who visit the page will be able to choose from among a wide variety of special incentives offered exclusively to American Express Cardmembers by dining, retail, entertainment, hotel, cultural, recreational and professional services enterprises.

KIT Limited Partnership has selected Trintech’s “ReconNET” to automate
the verification and reconciliation of its cash and credit cards and to
automatically assign, organize and prioritize its research incidents for
its chain of 481 restaurants. This will enable KIT to streamline
accounting processes and provide effective risk management and reporting
across its enterprise. KIT Limited Partnership owns and operates quick
service restaurants in seven provinces across Canada, serving 1.5
million customers a week. Trintech is a global provider of transaction
reconciliation and payment infrastructure solutions to retailers,
financial institutions, payment processors and network operators.

Research by Egg Money, the UK’s first ever dedicated spending account, shows that British consumers are unaware of how much they spend each month on plastic, believing they spend over $600 a month less than they actually do. This lack of understanding means Britons spend over $350 billion a year on their cards of which they are unaware. One in two claim to be unsure how much they spend on cards, believing they spend just $733 a month. Actual industry figures show average amount much higher at $1359 a month or about $30 billion more. Consumers believe they spend $414 billion a year on plastic when real amount is actually $766 billion.

Asia Payment Systems has restructured its management team. The board of
directors has appointed Robert Clarke as CEO and Benny Lee as
President. Lee will be responsible for directing all aspects of Asia
Pay’s operations and business development. Clarke will be responsible
for Asia Pay’s public company and regulatory functions, as well as
corporate finance and development. Current president and CEO Matt Mecke
will continue as a director of the company and Vice-Chairman of the
board. The new appointments reflect Asia Pay’s renewed and intensified
commitment to capitalize upon the abundance of opportunities in China
and to fully integrate its service offerings across the broader East
Asian region. The business opportunity and the company’s proven
business model remain fundamentally unchanged, but Asia Pay will focus
added effort on accelerating revenue growth to become net cash positive.

MBNA has started issuing “MasterCard PayPass” credit cards to new and existing customers in Atlanta. MBNA says it plans to expand the contactless payment option to other markets. MBNA will deploy the option for its affinity cardholders in Atlanta including such cards as those issued Atlanta Braves fans and the University of Georgia alumni. Last month, HSBC Bank announced it will add the “PayPass” contactless payment option to its debit cards. HSBC expects to upgrade about one million cards by year’s end. In August, Cleveland-based KeyBank became the first bank in the USA to launch “MasterCard PayPass” debit cards. Also in August, Citibank introduced a “MasterCard PayPass” key chain fob for its debit card customers. Citi plans to issue about 2.5 million “PayPass” debit devices. In May, PA-based convenience store chain Sheetz became the first retailer to launch a cobranded contactless credit card. The Chase-issued MasterCard offers the “PayPass” option. In January, Sheetz became the first retailer in the nation to adopt acceptance of MasterCard “PayPass.(CF Library 3/23/05; 5/27/05; 8/4/05; 8/25/05; 9/14/05)

Troubled processor CardSystems Solutions this weekend ended merger talks with CyberSource Corporation and has inked a new deal with San Francisco-based Pay By Touch. Atlanta-based CardSystems experienced a serious data security breach several months ago that potentially threatened the security of 40 million credit card accounts worldwide. Following the breach investigation, VISA and American Express notified CardSystems of their intention to terminate their relationships with the processor on October 31st. The processor announced on September 20th that CyberSource agreed to buy its assets. But this weekend, CyberSource said the inability of the parties to reach agreement in a timely manner created severe obstacles to closing the transaction. On September 29th, VISA announced it was delaying by three months its plan to cut ties with CardSystems to facilitate the planned acquisition of CardSystems’ assets by CyberSource. The extension will still apply for the Pay By Touch agreement. Pay By Touch says there are tremendous synergies between CardSystems and Pay By Touch that will hopefully boost growth of its biometric payment system. (CF Library 7/20/05; 9/20/05; 9/23/05)